High naphtha prices in Europe are continuing to push down demand for the prod

April 21/2011

(ICIS) -- Ongoing high naphtha prices in
Europe are continuing to push down demand for the product, sources said on
Wednesday. Driven by crude oil price hikes, naphtha reached a 33-month high on 8
April when the range was assessed at USD 1.054-1.062/tonne CIF (cost, insurance
and freight) NWE (northwest Europe). While prices have fluctuated slightly since
then, they have remained around the high levels last seen in July 2008, when on
21 July the range stood at USD 1.050–1.060/tonne.

While Brazil continued to show some interest, there was said to be little
demand from the gasoline sector, despite the forthcoming US driving season. “The
crack has to weaken to open arbs,” a trader said. A softer crack spread has a
dampening effect on flat prices. “The backwardation should disappear first to
bring back demand,” a second source believed.